AP MACRO UNIT 2 TEST

In 2007, the nominal gross domestic product (GDP) was $50 billion and the GDP deflator was 200. Thus real GDP was

$25 billion

In an economy, the price index in 2606 was 100 and the real gross domestic product (GDP) was $1,000. In 2010 , the price index was 110 and the nominal GDP was $2,200. Based on that information, which of the following can be inferred about the economy's nominal GDP in 2006 and real GDP in 2010

Nominal GDP in 2006=$1000, real GDP in 2010=$2000

In 2017 Sabrina earned an annual salary of $100,000 as an engineer. In 2018, her income rose to $105,000. The inflation rate in 2018 was 2%. How did Sabrina's nominal income and real income change in 2018 compared to 2017?

Nominal income increased and real income increased.

The consumer price index (CPI) is criticized for

overstating the true burden of inflation because it does not recognize consumers' ability to substitute goods and services as prices change

Which of the following describes a typical business cycle in the correct sequence?

peak, recession, trough, expansion

The unemployment rate measures the percentage of

people in the labor force who do not have jobs

Consumer Price Index (CPI) measures

prices of a specific group of goods and services purchased by consumers

The natural rate of unemployment is the unemployment rate when

there is no cyclical unemployment

According to the business cycle represented in the diagram above, the actual rate of unemployment equals the natural rate of unemployment when the economy is

On the potiental line

Which of the following transactions would represent an addition to a nation's current gross domeetic product?

The government increases its domestic purchases of food for use by the military.

In the circular flow diagram of a market economy, which of the following supplies the factors of production?

The household sector

Which of the following would cause the official unemployment rate to understate the problem of unemployment?

discouraged workers

The natural rate of unemployment can be defined as the

economy's long-run equilibrium rate of unemployment

The circular-flow model indicates that final goods are produced by

firms and sold in the product markets

The value of which of the following is counted in the United States gross domestic product?

A car produced in the United States and sold in Europe

Which of the following is an example of frictional unemployment?

A college graduate interviewing for two available positions

Which of the following groups of people would benefit from unanticipated inflation

II only (borrowers)

Which of the following grouns would most likely gain from unanticipated inflation?

Individuals who have borrowed money at fixed interest rates

Which of the following can be concluded about the consumer price index (CPI) for this individual from 1993 to 1994

It increased by 25%.

In the measurement of gross domestic product, investment includes spending on

businesses on capital goods and changes in inventory

Nominal gross domestic product is best defined as

the market value of final goods and services produced in a nation in a given year

the nominal gross domestic product (GDP) of the nation of Hypothetica increased in 2007 relative to the previous year, it must be true that in Hypothetica in 2007

the price level and/or the real GDP has increased